Pricing of Electronic Site Licenses

A roar from the dragon's lair:

Do commercial publishers understand that electronic site licenses offer new possibilities for price discrimination and do they plan to do it?  You betcha! Here is an excerpt from a recent speech by Derk Haank, CEO of Elsevier Science.
``So, we should have models where we make a deal with the university, the consortia or the whole country, where we say for this amount we will allow all your people to use our material, unlimited, 24 hours per day. And, basically the price then depends on a rough estimate of how useful is that product for you; and we can adjust it over time. It is a principle, which, in my view, is not immoral. We want to distinguish between big universities vs. small universities, corporate vs. universities, and maybe rich countries vs. developing countries. There is nothing wrong in that and any combination of the three, as long as people pay something for it, because I dont believe in giving it away for free.''
Entire text of Mr. Haank's speech.

From the library stacks:

Ken Frazier, head librarian at the University of Wisconsin, calls such consortium arrangements the ``Big Deal.''
In Frazier's opinion:
"Academic library directors should not sign on to the Big Deal or any comprehensive licensing agreements with commercial publishers.

You read that right. Don't buy the Big Deal. The University of Wisconsin Libraries and dozens of other research libraries also are holding out, convinced that the Big Deal serves only the Big Publishers. "

Entire text of Mr. Frazier's article.

Some economics of university site licenses:

Carl Bergstrom and I have recently written a short paper called  "Do electronic site licenses for academic journals benefit the scientific community?"  We explore  the theory of site licenses for academic journals. We argue that university site licenses serve no logistic purpose, but are solely a fiscal instrument.  In the case of journals owned by profit-maximizing firms, site licenses allow publishers to price discriminate more sharply than they could if they were forced to sell journal access to individuals.  Consumers' surplus of the academic community would be greater if libraries refused to purchase site licenses from publishes that set prices substantially above average cost. On the other hand,   university site licenses increase the total benefit to the scientific community by purchasing site licenses from nonprofit journals.


Copyright © 2002 Ted Bergstrom